Instagram is building a standalone app for shopping

More than 25 million businesses already have Instagram accounts, and 2 million of them are advertisers, Facebook Chief Operating Officer Sheryl Sandberg said on the company’s most recent earnings call.

Four in five Instagram users follow at least one business. Creating a standalone app would allow the company to provide a dedicated home for an increasingly popular activity on Instagram while also expanding opportunities for revenue.

Instagram is working on a new standalone app dedicated to shopping, The app — which may be called IG Shopping — will let users browse collections of goods from merchants that they follow and purchase them directly within the app, according to two people familiar with the matter. Instagram declined to comment.

It could not be learned when the app might launch. Its development is still ongoing, and it could be canceled before it is released. But sources familiar with its development say Instagram believes it is well positioned to make a major expansion into e-commerce. 

Over time, Facebook could introduce more tools for merchants who are building their businesses on Instagram, directly challenging e-commerce platforms like Shopify, according to a person familiar with the company’s thinking. Most online businesses need an Instagram account already, the thinking goes; many of them would surely use paid business tools if they became available. 

Some companies already sell such tools to Instagram advertisers. Four Sixty, for example, lets businesses pay for help creating shoppable photo galleries, content moderation, post scheduling, and other services. Shopify’s app store contains dozens of plugins related to promoting and managing Instagram-based businesses.

Instagram began testing a shopping feature in November in 2016, and rolled it out more broadly in March of last year. Companies can tag posts with individual products, allowing users to shop directly from photos. 

Instagram is currently testing a feature that lets users shop from Instagram stories.Shopping would not be the first Instagram feature to be spun out into a standalone app. The company has been testing Direct, a new messaging app, since last December. In June it introduced IGTV, a YouTube competitor that puts vertically shot videos into their own app.